Claims and Disputes

Stark cloudy weather over empty exterior view of the US Capitol

The extended duration of the October 2025 shutdown, which will soon be the longest in history, adds a new level of uncertainty and pressure for federal contractors and subcontractors. Does the shutdown excuse the government from paying invoices that come due during the shutdown? Can the government require contractors to work without payment? What relief can contractors expect for delays, cost increases, and other impacts of the shutdown? What options are available for contractors and subcontractors that are simply unable to perform without timely payment?

Once again, the threat of a government shutdown looms over federal contractors and grantees. If Congress does not pass a continuing resolution or other funding legislation before midnight on Saturday, agencies will lack authorized appropriations to fund their operations. Although regrettable, the risk of a shutdown (or debt ceiling crisis) has been a fairly common occurrence over the last few years.

Per- and polyfluoroalkyl substances, commonly known as PFAS, are long-lasting chemicals that are quickly gaining notoriety for both their persistence in the environment and their ubiquity in water, air, and soil. Developed in the 1950s, PFAS are used in a wide range of products including firefighting foam, stain-resistant and water-repellant fabrics, nonstick cookware and many others. Concerns over PFAS contamination are mounting and the associated caselaw is growing. Federal contractors could be impacted by PFAS in two primary ways: first, contractors may face PFAS-related litigation resulting from the manufacture and distribution of affected products and second, contractors may have to adjust specifications to comply with the government’s shift away from products containing PFAS.

Unlike private parties in a contract, the government has several unique rights that allows it to avoid its contractual obligations in certain circumstances. We have written about the government’s right to terminate contracts for convenience. But the government may also avoid contract liability by invoking the sovereign act doctrine as a defense. This defense is available where government’s obstruction to the contract is considered a public and general act as a sovereign.

In a case of first impression, the U.S. Court of Appeals for the Federal Circuit recently ruled in SEKRI, Inc. v. U.S., No. 21-1936 (May 13, 2022), that a non-profit agency that was the sole mandatory source for a specific piece of military kit had standing to file a bid protest over a solicitation…

In Seventh Dimension, LLC v. United States, No. 21-2275C (May 11, 2022), the Court of Federal Claims provided detailed guidance concerning the question of “whether, and under what circumstances, the government may cancel a Federal Acquisition Regulation (“FAR”) part 15 procurement and start over from scratch.” Seventh Dimension, LLC was, as the court put it, “the last offeror standing in this contractor edition of Survivor” after filing multiple successful protests of an Army procurement. However, Seventh Dimension was unable to reap the benefits of its hard-fought success because the agency ultimately “decided to pull the plug on the show, cancelling the procurement following a two-year process.” Seventh Dimension challenged the agency’s cancellation decision as arbitrary and capricious, and the Court of Federal Claims agreed.

Government contractors facing products liability suits may have a number of unique defenses available them, depending on the government’s role in the alleged act or omission giving rise to the plaintiff’s claimed harm. One such defense is the “government contractor defense.” Despite its name, successfully establishing the defense requires proof of more than just a government contract.

As most federal contractors know, the standard FAR clauses grant the government the right to default a contractor for delay. These same clauses, however, protect contractors where the delay is “excusable” and involve “unforeseeable causes beyond the control and without the fault or negligence of the Contractor.” Examples listed in the clauses include, among other…

Rows of Steel Round Bar storage and stacking in the warehouse for industrial construction. Black and white with Shallow focus.

The ASBCA’s November 2021 decision in Harry Pepper and Associates, Inc., No. 62038 et al. (Nov. 3, 2021) offers important guidance on the role of live witness testimony in one of the most challenging aspects of differing site conditions claims: proving that the actual site conditions were actually different from those that were expected.

The claims at issue in the case arose from a $36 million task order for the restoration of NASA’s B-2 rocket test stand, which was built in the 1960s as part of the Apollo program and used to test the Saturn V rockets. The restoration was needed so that the B-2 stand can be used to test rocket vehicles for use in NASA’s new moon-launch program, Artemis.